Technology Trends 2024: McKinsey’s Analysis & What It Means for High-Tech Manufacturing

The high-tech manufacturing industry — and the market at large — has seen its share of challenges over the past few years. Technology equity investments fell 30-40% in 2023 alone, largely due to increased costs and economic uncertainty. Elevated costs, talent shortages, and supply chain volatility also present ongoing hurdles, especially for high-tech manufacturing procurement professionals.

Despite these challenges, the future is looking up. For proof, look no further than the McKinsey Technology Trends Outlook 2024. This 100-page annual report identifies 15 technology trends that reflect the industry’s growing optimism and innovation, indicating a “positive long-term trajectory” for the macroeconomic environment. It highlights the increased pace of innovation, demand for advanced skills, and public sector support for spending.

While some trends are ubiquitous in today’s global conversation — think: gen AI — others are less obvious. They span categories such as computing and connectivity, sustainability, and the broader digital future.

Here are the top five things high-tech manufacturing procurement professionals should know about McKinsey’s report.

1. Generative AI: More Than A Buzzword

Talk about generative AI is seemingly everywhere right now. And though it could be easy to dismiss the hype, McKinsey’s report reveals that it’s time to take this emerging technology seriously — a lot more seriously. According to the most recent McKinsey Global Survey on the state of AI, 65% of workers say their company uses gen AI, an uptick from one-third in 2023. Even more importantly, gen AI has the potential to generate $2.6 trillion to $4.4 trillion annually, thanks to its ability to increase productivity and efficiency.

Delphine Zurkiya, a senior partner at McKinsey, called 2023 “the year of pilots” for gen AI. She said that now, companies are focused on accelerating adoption and creating value. To accomplish this goal, they’re expanding the use of secure enterprise platforms that harness the power of AI, while also “reskilling” workers to leverage these powerful tools.

The McKinsey report warns organizations to do extensive research and planning before investing in enterprise platforms, ensuring their partners offer extensive risk mitigation, secure operating models, and the ability to scale.

2. Applied AI: Unlocking True Value

Despite all the focus on generative AI, one fact remains: the bulk of AI’s value lies in applied AI. According to McKinsey research, AI applications could unlock $11 trillion to $18 trillion annually in economic value, fueling further excitement about applied AI’s potential. A 2024 McKinsey survey found that 67% of workers expect their company to invest more in AI over the next few years, and generative AI allows organizations to take this investment to new heights.

McKinsey partner Michael Chui said that applied AI could have “as much or greater business impact” than generative AI. The report emphasized that generative AI has more power when combined with applied AI. For example, applied AI systems can be used to analyze the content made by generative AI, identifying patterns and trends that inform future outputs from the generative AI system.

3. Machine Learning: Scaling for Enterprise

A growing number of enterprise companies are leveraging machine learning (ML) applications in 2024, helping organizations scale, leverage analytics, and increase productivity. As machine learning becomes more industrialized, functionality and interoperability are improving rapidly.  McKinsey’s research shows that successful implementation of industrialized ML can reduce production timelines for ML applications by 8-10 times, and decrease development resources by up to 40%.

In 2024, more companies will use industrialized ML to easily monitor and facilitate interaction between other applications and data sources. They’re also using the technology for performance tracking, validation, and maximizing the value of generative AI.

McKinsey partner Douglas Merrill said that the past few years have offered incredible strides in machine learning, but many organizations have struggled to make use of the technology. “MLOps—the way that the math gets made useful—is finally catching up,” Merrill said in the McKinsey report. “The tools and processes are beginning to mature, but we still need additional talent and skills to reap the benefits of machine learning.”

4. Next-Gen Software Development: Increasing ROI

Generative AI and cloud-native architectures are rapidly reshaping the landscape of software development, with new tools dramatically changing how engineers plan, test, deploy, and even maintain software. Once-complicated tasks are increasingly simplified, meaning even professionals from traditionally lower-tech industries are dipping their toes into app development.

AI-powered software development is helping companies boost productivity, efficiency, and adaptability, leading to an overarching democratization of software development. Companies are also shifting away from disparate tools and adopting seamless, integrated solutions.

“Next-generation software development tools are fundamentally changing the role of developers, freeing up capacity for improved experiences and architectures, and ultimately, greater value creation,” said McKinsey partner Santiago Comella-Dorda.

As software engineers spend less time on pure code generation, they can spend more time on value-adding tasks like architecture design and problem-solving. This trend benefits their customers and improves the usability and adoption rates, helping customers use more advanced tools for daily workflows.

5. Advanced Connectivity: Revolutionizing Telecommunications

From wireless low-power networks to 5G and 6G cellular, telecommunications technologies are revolutionizing industries like manufacturing, agriculture, and financial services. Organizations that were once hesitant to invest in connectivity technologies are now jumping on board the trend, with satellite connectivity, 5G networks, and other cutting-edge systems offering new opportunities for growth and increased revenue.

The emergence of the Internet of Things (IoT), optical fiber, and lower-power area networks has made advanced connectivity one of the top five most adopted trends of 2024. The industry saw a $29 billion equity investment in 2023, and companies across aerospace, information technology, media, oil, gas, and more have fully scaled the technology.

As interoperability improves, more companies are moving toward the next level of implementation. Reduced installation costs now allow small- and medium-sized businesses to access the technology, while larger enterprises are scaling more holistically.

Harness Emerging Technologies with Arkestro

These five trends only scratch the surface of the new way companies are operating in 2024 and beyond. Immersive-reality technologies, cybersecurity, and quantum-based technologies are also revolutionizing industries across the globe, while advancements in robotics, mobility, and bioengineering are changing the world of manufacturing, semiconductors, and more.

Read the full report for more insights. Then, talk to Arkestro to see how we can help you leverage top trends — including unlocking value, increasing ROI, and machine learning — to optimize procurement processes and increase your competitive advantage.